When investing, there are three to keep in mind that can erode the purchasing power of each dollar that we have:
(1) The first one is inflation. If inflation runs at 4.0% annually, that means it will take $1.04 in 2014 to buy what cost you $1.00 in 2013.
(2) The second thing is taxes. If you own 1,000 shares of ExxonMobil in a taxable account, you will receive $2,520 in annual dividends. But, if you are in the 15% tax bracket, you will have to send $378 to Uncle Sam, effectively giving you $2,142 in oil well money from Exxon that you can use to spend as you please.